Plaintiff Columbus McKinnon Corporation ("CM") brought this diversity action against CSC in connection with CM's efforts to develop the first computer-assisted hoist. CM is a New York corporation with its principal place of business in the Town of Amherst, N.Y. CSC is a foreign corporation headquartered in Taiwan. Plaintiff's First Amended Complaint ("Complaint") PP 1-2. See 28 U.S.C. §§ 1332, 1391(a).

By way of background, this case mainly and primarily focuses on an allegedly defective computer microprocessor ("chip") utilized in the control board of the hoist. CM asserts that in 1983 it entered into a written agreement with CSC for the purchase of computer boards manufactured by CSC for the hoists. The agreement provided that CSC would utilize "an Intel 8049 microprocessor" in such boards or, at CM's option, an equivalent chip. Complaint, P8. The control board was designed by Newman, who had been contractually retained by CM for that purpose. The Intel 8049 chip allegedly was an integral part of the control board design. Id. P7. At CSC's suggestion, CM and CSC agreed that CSC should purchase the chips from United Microelectronics Corp. ("UMC"), which CSC represented to be an Intel licensee. The manufactured control boards incorporating the UMC chip, were delivered to CM in New York. Id. PP 10-12. The control boards are alleged to have been defective, with CM later determining that the "faulty" chip (faulty because it was not an Intel 8049 equivalent) was the cause of many of the problems with the hoists. Id. PP 13-15.

CM proceeds against CSC under the theories of breach of contract, breaches of implied and express warranties, as a third-party beneficiary of the contract between UMC and CSC for the purchase of the chips, and under a theory of fraudulent misrepresentation. Id. PP 16-48. Among the responses of CSC in its Answer to the First Amended Complaint ("Answer") are the assertions that CM, "its agents or other parties over which CSC had no control" caused the alleged defects in the computer boards. Answer P49. CSC further asserts that CM was responsible for the computer board design and "the software components of the computer chip" and that CSC cannot be held liable for damages resultant therefrom. Id. P51.

The original complaint in this action was filed February 19, 1988, served on the defendants months thereafter and answered by CSC December 14, 1988. The First Amended Complaint was filed August 17, 1989 and answered by CSC September 15, 1989. Over three years later, CSC moved before United States Magistrate Judge Leslie G. Foschio of this Court for leave to file a third-party complaint against Newman.
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Leave having been granted, CSC served and filed its Third-Party Complaint, reiterating its denial of any liability to CM, while alleging in the alternative that, if it is found liable to CM, "Newman is responsible in whole or in part for the damages suffered by [CM] based on his negligence, malfeasance, professional malpractice, and culpable acts and omissions." Third-Party Complaint P 15. CSC, in essence, does not seek to hold Newman liable to itself directly, but seeks instead "contribution and/or indemnification" from Newman for any damages for which CSC is found liable to CM. Newman's Third-Party Answer denies any responsibility for such damages. He now seeks dismissal of the third-party action "pursuant with Rule 56(b) because the complaint fails to state a claim against [him] upon which relief can be granted, or, alternatively, * * * pursuant with Rule 10-B, * * * for a more definite statement * * *." Notice of Motion to Dismiss for Failure to State a Claim and, in the alternative, Motion for a More Definite Statement, at 1-2.

A district court in ruling upon a FRCvP 12(b) motion to dismiss a complaint for failure to state a claim upon which relief can be granted has two options when, as in this case, matter outside the pleading has been presented in support thereof. The court may exclude the additional material and decide the motion on the complaint alone or it may convert the motion to one for summary judgment under FRCvP 56 and afford the parties an opportunity to present pertinent supporting material. FRCvP 12(b); Kopec v. Coughlin, 922 F.2d 152, 153 (2d Cir. 1991); Fonte v. Bd. of Mgers. of Continental Towers Condo., 848 F.2d 24, 25 (2d Cir. 1988). Because this motion was originally noticed by Newman as one under FRCvP 56(b) and both parties have submitted affidavits in support of their respective positions and have participated in oral arguments on the motion, this Court will proceed as if it were one for summary judgment under FRCvP 56. Grand Union Co. v. Cord Meyer Development Corp., 735 F.2d 714, 716-717 (2d Cir. 1984). Such motion may be granted if it is shown "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FRCvP 56(b); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Only disputes over facts that might affect the outcome of the suit under the governing substantive law will properly preclude the granting of such a motion. In other words, only genuine issues that relate to material facts will defeat a motion for summary judgment. Facts that do not relate to the legal elements of a claim are not material. Anderson, 477 U.S. at 247-248. Further, the party opposing the motion may not rest solely on mere allegations, but must present competent evidence showing that there is a genuine and material factual issue for trial; a "mere existence of a scintilla of evidence" supporting the non-movant's case is insufficient to defeat a motion for summary judgment. Anderson, 477 U.S. at 252.

As the above-emphasized language makes clear, a third-party claim is proper only if a non-party might be found liable to the defendant for all or a part of a plaintiff's successfully-asserted claim against a defendant. In a diversity action, a federal court must look to the applicable state substantive law in order to determine if such contingent liability exists. Widett v. U.S. Fidelity and Guar. Co., 815 F.2d 885, 886 (2d Cir. 1987). In the present case, there is no contention that New York law is not controlling as between these parties. See Brown v. Cranston, 132 F.2d 631, 633 (2d Cir. 1942) (state law of contribution controls whether third-party plaintiff may sustain a claim under such a theory), cert. denied sub nom. Cranston v. Thompson, 319 U.S. 741, 87 L. Ed. 1698, 63 S. Ct. 1028 (1943). Thus, irrespective of the lenient notice-pleading requirements of the federal rules and the broad discretion courts have in allowing the impleading of third parties -- see Old Republic Ins. Co. v. Concast, Inc., 99 F.R.D. 566, 568 (S.D.N.Y. 1983) --, there still must be a basis for the third-party's liability to the defendant under state law. Under New York law, CSC claims that Newman is liable to it under the theories of indemnification and/or contribution for any damages for which it might be found liable.

"Except as provided in section 15-108 of the general obligations law, two or more persons who are subject to liability for damages for the same personal injury, injury to property or wrongful death, may claim contribution among them whether or not an action has been brought or a judgment has been rendered against the person from whom contribution is sought."

At first glance, a basis for CSC's third-party claim under this theory appears tenable. As CSC quotes:

"'Article 1401 of the CPLR, as enacted in 1974, creates a right of contribution for a tort feasor [sic] regardless of whether or not the other tort feasors have been sued by P, the injured person. David D. Siegel, New York Practice, Section 172 (1978). CPLR 1401 applies not only to joint tort feasors, but also to concurrent, successive, independent, alternative, and even intentional tort feasors.' Id. Thus, under settled precedent, CSC is entitled to contribution and/or indemnification from Newman." CSC's Memorandum of Law at 7-8.

It is far from clear, however, that "settled precedent" affords CSC indemnification or contribution from Newman, as CSC claims. To so hold, this Court would have to conclude that (1) CM's complaint sounded in tort rather than in contract and (2) both (a) that Newman's alleged breach of his duty to CM was tortious and (b) that CSC sufficiently alleged a third-party claim for contribution based on such tortious behavior. Otherwise, such contribution would not be between two tortfeasors. Because whatever liability Newman would have had to CM would be contractual in nature, the above contribution statute has no application to the present case.
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Thus, as a matter of law, CSC has not stated a claim for contribution against Newman. While CSC has raised disputed facts as to Newman's possible breach of duty to CM and as to any injuries caused by such breach, these facts are not material to the viability vel non of the claims against Newman. CSC has failed to present any facts showing that Newman breached a legal duty independent of his contractual relationship with CM. CSC has also failed to present any facts showing that the injuries suffered by Newman's breach were anything more than economic losses.

A discussion of pertinent New York case law illustrates the propriety of this conclusion. Such evidences a trend toward a stricter delineation between contract and tort by New York's courts in recent years, which delineation is ignored by CSC. For instance, in Sargent, supra, a school district sought damages for a faulty roof against an architectural firm and a general contractor involved in a high school construction project. Both had been hired by the school, but under separate contracts. Not unlike the present case, the complaint therein alleged various contractual claims, as well as a claim of fraudulent concealment. Id. at 24. The trial court had granted the defendants' motions and dismissed the complaint as against the general contractor, finding that it sounded primarily in contract and was thus barred by the six-year statute of limitations applicable to contract actions under CPLR § 213(2). The Appellate Division had affirmed, specifically concluding that the school's claims against both parties sounded in contract. Thereafter, the architectural firm sought contribution and indemnification from the general contractor. Under a set of facts similar to those herein,
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New York's Court of Appeals rejected the architectural firm's attempt to bring the general contractor into the case for the purposes of contribution. Sargent at 25-26. By looking at the legislative history of CPLR § 1401, as well as Dole v. Dow Chemical Company, 30 N.Y.2d 143, 331 N.Y.S.2d 382, 282 N.E.2d 288 (1972) (codified by section 1401), the Sargent Court concluded that purely economic loss resulting from a breach of contract did not constitute "injury to property" under New York's contribution statute and that the statute should not be extended beyond tort so to also include contribution based upon contractual liability.

The Court buttressed its position by noting that the statute defined "'injury to property' as 'an actionable act, whereby the estate of another is lessened, other than a personal injury, or the breach of a contract' (emphasis added)." Id. at 28 fn.2 (quoting from section 25-b of New York's General Construction Law ("GCL"). Thus, contribution was not available to Sargent (the architectural firm) against Thompson (the general contractor) because the school's damages were essentially contractual as they related to Thompson. Id. at 26-29. The Court also noted that, although the contribution statute was applicable to "breach of warranty" cases involving a defective product that caused physical injury, such cases were properly characterized as based in both tort and contract. Because Sargent involved a contractual relationship without an injury to person or property, it could not possess such duality. Id. at 28 fn.2. See also Schiavone, supra; Seely v. White Motor Co., 63 Cal. 2d 9, 45 Cal. Rptr. 17, 403 P.2d 145 (1965) (expressing the now-widely adopted view that tort remedies are not available in the commercial setting when economic loss absent physical injury is at issue); Sommer v. Federal Signal Corp., 79 N.Y.2d 540, 552, 583 N.Y.S.2d 957, 593 N.E.2d 1365 (1992) (discussing the factors New York courts have used to determine whether an action sounds in either contract or tort).

Within this context, CSC has raised a factual dispute as to Newman's potential liability to CM and, for the purposes of this motion, this dispute is resolved in CSC's favor. Nonetheless, the dispute is not material because any such liability cannot be characterized as arising out of tort. By no stretch of this Court's reasoning or conjecture may Newman -- a computer consultant contractually retained by CM to design the hardware and software of the computer control board, to produce a working prototype of a hoist and to attempt later to work out the alleged difficulties with the UMC chip -- be considered a tortfeasor. Any lapse in performance on his part could only be redressed via a contract action -- even with regard to the June 1984 trip to Taiwan or the troubleshooting role he played after he had fulfilled his obligations under the original contract. His relationship with CM remained contractual and any breach of duty to CM could only be considered a breach of contract. Indeed, CSC not only fails to allege any specific breach of duty, but also fails to allege any breach of duty that would involve an extra-contractual duty. Further, any injury he may have caused CM would be mere economic injury which does not qualify as an injury to property under New York law. See GCL § 25-b; Schiavone, 439 N.Y.S.2d at 937-940. CSC does not present any material facts creating a genuine issue in this regard either.

With regard to this first phase of the relationship, Newman did indeed design the computer control board and its various components and accompaniments, but this was a contractual duty. Other than its brief allegation of negligence, malpractice and the like, CSC's Memorandum of Law and the Brady Affidavit offer no basis for, and often contradict, such an allegation. CSC also asserts that CM relied upon Newman's expertise in selecting the original microprocessor, in an apparent attempt to construct some type of malpractice claim, but this too must fail as a matter of law. Not only does CSC not dispute the existence of the CM-Newman contractual relationship, references to such relationship are found throughout its third-party papers. See Complaint PP 7, 40 and Third-Party Complaint, Exhibit C; Answer P7 and Third-Party Complaint, Exhibit D; CSC's Memorandum of Law at 2, 4; Brady Affidavit at Exhibit A, p.39, and Exhibit C, pp. 91-93. There is no basis in law for extending the doctrine of professional malpractice to cover independent computer consultants. To lift the theory of malpractice from its narrow origin of personal, professional services to a lay patient or client and apply it to the law of commercial contracts would obfuscate the necessary boundaries of these two areas of law. Triangle Underwriters, Inc. v. Honeywell, Inc., 604 F.2d 737, 745 (2d Cir. 1979) (rejecting application of malpractice statute of limitations to a commercial relationship). Thus, Taft v. Shaffer Trucking, Inc., 52 A.D.2d 255, 383 N.Y.S.2d 744, 747 (4th Dep't 1976), and Corva v. United States Auto. Ass'n, 108 A.D.2d 631, 485 N.Y.S.2d 264, 265 (1st Dep't 1985), -- which were relied on by CSC in support of its position -- are both easily distinguished in that they dealt with the potential liability of a plaintiff's attorney to the defendant tortfeasor under the theory of contribution. No additional duty above and beyond his contract may be imposed upon Newman under the facts of this case. Cf., AT&T v. New York City Human Resources Admin., 833 F. Supp. 962, 984 (S.D.N.Y. 1993).

CSC alleges that CM's reliance on Newman extended to the latter's advice on the selection of alternate manufacturers -- the second phase of the CM-Newman relationship. However, such advice is irrelevant, not only because of the nature of the CM-Newman relationship, but also because there is no allegation that Newman recommended either CSC or UMC to CM. It appears that Newman had not had any contact with CSC until after CM had selected it as its supplier. Even if Newman had, this Court is still left with merely a contractual relationship. Even if he breached some type of duty to CM during his June 1984 trip to Asia, by not discovering that UMC was not an Intel licensee or that the chips had an intolerance to electrical "noise," this was still undertaken pursuant to the contractual relationship with CM, unsupported arguments to the contrary notwithstanding. Thus, with regard to this phase of the relationship, CSC also fails to make any allegation or to present material facts alluding to a breach of duty above and beyond the contractual relationship.

Finally, with regard to the third phase of the CM-Newman relationship -- the after-the-fact troubleshooting Newman undertook -- the same reasoning as above applies. The relationship was contractual; CSC has not created a genuine issue of material fact to the contrary.

Maintaining this important distinction between the realms of tort and contract is also not undermined by the nature of the injury allegedly suffered by CM at the hands of Newman. There are no material facts creating a genuine issue whether Newman's design, the prototype and his other activities caused CM to suffer an injury to person or property. Unlike the property owner in Sommer, supra, there is no evidence that CM suffered any damage to property due to Newman's alleged breach of duty. CSC did not even allege such. Further, this breach of duty did not result in any type of accident or cataclysmic occurrence similar to the fire in Sommer.

Based on the foregoing, this Court concludes that, as a matter of law, Newman's duty to CM was solely contractual. CSC has failed to present any material facts creating a genuine issue to the contrary and thus, it cannot sustain a claim for contribution.

Because there was no contract to indemnify and because CSC must be found at least partially at fault to incur any liability, there is no basis for allowing third-party plaintiff CSC to pursue its claim for indemnification against third-party defendant Newman. Further, because (1) CM's alleged injury at the hands of Newman was not alleged to be an injury to person or property, (2) CM and Newman had a commercial relationship and (3) there is no basis for imposing an independent legal duty upon Newman, CSC's claim for contribution against Newman must also be dismissed.

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